15 Big Reasons Why Company Promoters Selling Stake

Promoter’s stake sale is not a new thing in stock markets. These big reasons why company promoters selling stake can provide valuable clues about a stock.

Promoters are those individuals or companies taking active steps in the formation, organization & financing of a corporation.

They are usually the biggest & most clued investors about company’s growth prospectus. It is the reason why buying & selling of shares by promoters may trigger wild moves in a stock.

According to a post published in Equity Master, the promoter’s stake in the company reflects his confidence and commitment towards the business.

A promoter who is increasing his/her stake is seen as a positive signal for investors. On the other hand, a promoter who is decreasing his/her stake is considered as negative signal for investors.

Small investors often become nervous when one or more promoters offloading their stake. This may in turn trigger panic selling by a large number of investors. But, a decreasing shareholding pattern of promoters is not a negative signal always.

Sometimes, it can have neutral to even overall positive effects on the stock price of a company depending on the reasons for stake sale. You just need to track the promoter’s shareholding pattern wisely to analyze possible stock trend. Here are 15 big reasons why promoters are offloading stake in securities:

(1) Promoter Exiting For Better Investment Opportunities

It is one of the most significant reasons why company promoters selling stake in securities. Promoters are skilled & experienced investors who are actively involved in the business operations of a company.

They are smart enough to use every business opportunity to get maximum benefits. When highly favorable business scenario is available they may exit from old businesses.

They can use their skill & cash in similar or related or even a new business sector. They never hesitate in setting up even a new business organization with better opportunities.

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